Hilton Worldwide Holdings Q4 FY24 earnings call HLT

Hilton reported a strong end to 2024, with system-wide RevPAR increasing 3.5% year-over-year in Q4, surpassing guidance. This growth was driven by solid leisure trends and continued recovery in Business Transient^📎 and Group segments. For the full year, system-wide RevPAR grew 2.7%, contributing to a record adjusted EBITDA of over $3.4 billion, an 11% increase year-over-year, demonstrating the strength of Hilton's fee-based business model.

The company achieved record unit growth in FY24, opening 973 hotels and nearly 100,000 rooms, marking the largest increase in Hilton's history and resulting in 7.3% net unit growth. The development pipeline expanded 8% year-over-year to approximately 500,000 rooms, with a record 154,000 rooms signed. Conversions accounted for 45% of room openings, significantly contributing to this growth.

Management expressed increased optimism regarding the macroeconomic environment, particularly post-election, citing a more stable regulatory and tax policy outlook. This sentiment is expected to bolster continued recovery in Business Transient^📎 and Group segments, with large corporates showing strong performance. While not fully factored into guidance, a potential uptick in economic growth is anticipated to benefit business travel.

Luxury and Lifestyle hotels comprised roughly half of Hilton's system-wide openings in FY24, expanding these portfolios to over 900 hotels globally. The pipeline for these segments is nearly double the existing supply, indicating sustained growth. Notable openings planned for 2025 include the iconic Waldorf Astoria in New York, following an extensive renovation, and new Waldorf Astoria and Conrad properties in various international locations.

International markets showed varied performance in Q4. Americas outside the U.S. saw 8.1% RevPAR growth, Europe 6.2%, and Middle East and Africa 8.4%. Asia Pacific RevPAR grew 1.7%, with APAC ex-China up 8.8%. China RevPAR, however, declined 4% in Q4 due to macro conditions, though trends improved sequentially. For FY25, low single-digit growth is expected in China, with overall APAC in the low to mid-single-digit range.

Hilton returned $3 billion to shareholders in FY24 through buybacks and dividends, including a $0.15 per share cash dividend in Q4. The Board authorized another $0.15 per share dividend for Q1 FY25, with a total capital return of approximately $3.3 billion projected for FY25. The company maintains a disciplined approach to capital allocation, with key money contributions on deals typically at 10% or less.

Hilton remains disciplined in its cost structure, with GAAP G&A for FY25 projected to be slightly lower than 2019 levels. While owners face industry-wide cost pressures, particularly in insurance and wages, Hilton actively works to identify operational efficiencies to support their profitability. The company's EBITDA margins for FY24 were 8,000 basis points higher than the prior peak in 2019, reflecting effective cost control.